Why do banks not like holding REOs

[John Cobb]

I have just read an article by Joshua about REOs and in it his last point is

'Note that lenders and banks do not like holding REOs on the books, and try to get rid of these as quickly as possible.'

Why is this and what are the reasons behind it

[John Andre]

Banks are penalized for NPN on their books. If they have a billion in dept, they are restricted from lending up to 5 times that amount by the feds.